Britvic shares have lost their fizz after a proposed merger with rival drinks group AG Barr came to nothing.

The two agreed an all share deal in November but it lapsed in February when the Competition Commission launched an investigation. But on Tuesday the watchdog gave the deal the go-ahead, although Britvic already seemed to have cooled on the idea. Now AG Barr confirmed that its potential partner had rejected a new - and better - bid:

[Barr] made a revised proposal to the board of Britvic for an all share merger of the two companies. This proposal was for an offer on more favourable terms for Britvic shareholders than the offer recommended by the respective Boards and subsequently approved by the AG Barr and Britvic shareholders in January 2013.

The board of Britvic has rejected this proposal. As a result AG Barr confirms that it does not intend to make an offer for Britvic.

Britvic, best known for its Tango and Fruit Shoots drinks, has fallen 7p to 515p while Barr is 4.5p better at 528p. Analysts believed a deal would be good for the companies, with Panmure Gordon saying after the merger clearance:

We think the final clearance by the Competition Commission paves the way for AG Barr to make an improved offer for Britvic. We acknowledge that Britvic sees a strong standalone future but we feel, in line with Barr's management, that there is a compelling rationale for the combination of the businesses.

This is based on the potential cost synergies, improved position within the UK market place, scope for international expansion and an improved balance sheet.